Chapter 15: Q 19. (page 377)
Who are the near-poor?
Near-poor refers to those people who earn incomes just above the poverty line.
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A group of 10 people have the following annual incomes: \(24,000, \)18,000, \(50,000, \)100,000, \(12,000,
\)36,000, \(80,000, \)10,000, \(24,000, \)16,000. Calculate the share of total income that each quintile receives from this
income distribution. Do the top and bottom quintiles in this distribution have a greater or larger share of total income than the top and bottom quintiles of the U.S. income distribution?
Exercise 15.2 and Exercise 15.3 asked you to
describe the labor-leisure tradeoff for Jonathon. Since,
in the first example, there is no monetary incentive for
Jonathon to work, explain why he may choose to work
anyway. Explain what the opportunity costs of working
and not working might be for Jonathon in each example.
Using your tables and graphs from Exercise 15.2 and
Exercise 15.3, analyze how the government welfare
system affects Jonathan’s incentive to work.
If a country had perfect income equality what
would the Lorenz curve look like?
What is measured on the two axes of a Lorenz
curve?
How has the inequality of income changed in the
U.S. economy since the late 1970s?
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